FDA Approves Generic Actavis ADHD Drug, Shire Shares Fall
The US Food and Drug Administration (FDA) have ruled against Shire in a clash surrounding generic copies of their ADHD medication, Adderall XR, by approving a cheap version of the drug from Watson’s Actavis division.
The verdict is a setback to Shire’s near-term earnings and shares, with the drug maker’s shares falling 12.4% to £17.23 at 10.10am (UK time) this morning.
Shire had previously filed a citizen petition with the regulatory agency with the aim to delay generic opposition to their ADHD drug by requesting that organisations provide more robust bioequivalence data. The Food and Drug Administration responded noting that they require that all Abbreviated New Drug Applications (ANDAs) to establish bioequivalence “using partial area under the curve measurements at five hours and beyond five hours, for both d- and l- amphetamine.”
Previously there had only been two approved generic forms of Adderall XR, both of which are supplied by Shire, and the entrance of a new rival will escalate pricing pressure. Although off-patent, Adderall XR is still a major earner, providing flat sales for the first-quarter of $111.4 million.
Analysts at Jefferies said the FDA’s approval of the first abbreviated new drug application had been expected, but the approval had come quicker than anticipated.
Adderall XR has been a basis of Shire’s growing ADHD drug business, although the corporation has newer drugs for the condition in Vyvanse and Intuniv that are both growing U.S. market share.
Shire have commented that they believe that they will stay competitive through the distribution of branded Adderall XR and through their two approved generic partners Teva and Impax. The business added that “while recognising that there will be multiple dynamics affecting the overall market following the approval of the Actavis generic, Shire continues to believe that it will deliver good, full-year 2012 earnings growth.”
Mark Clark, an analyst at Deutsche Bank, said the effect of the entrance of Watson’s generic would be felt primarily on near-term earnings forecasts, as most Shire observers had already presumed such generic rivalry in 2013.
Shire has grown quickly over the years as a result of the fruitful marketing of drugs for ADHD. More recently, the firm has branched out into new areas and now has a increasing focus on rare diseases, an area of mounting interest across the drugs sector.
The group has frequently been tipped as a takeover target for larger companies looking to replenish their drug pipelines.